The report discusses the increasing adoption of cloud technologies in the financial services sector, emphasizing the limitations of merely migrating existing on-premise applications to the cloud without re-engineering for true cloud capabilities. It highlights the cost-saving benefits and superior scalability achieved through serverless cloud technologies, alongside the challenges unique to enterprise risk management. The document also outlines drivers, barriers, and strategic considerations for firms transitioning to cloud models in capital markets.

1. Cloud adoption
Risk.netSpecial report 2019
Sponsored by

2. 1
Sponsored feature
Cloud adoption Special report 2019
Successfully moving risk
software to the cloud
Cloud technologies offer numerous benefits over traditional on-premise deployments.While the rate of adoption in the financial
services industry was initially slow, banks and asset managers are now embracing these technologies and moving their enterprise
applications to the cloud. CompatibL Technologies describes its experience of leveraging the latest serverless technologies for its
enterprise risk application

3. 2
Sponsored feature
risk.net
Building new architecture versus moving
existing on-premise architecture to the cloud
Migrating a mature enterprise software package
to the cloud is a formidable challenge.A complex
project with tough deadlines and budget limitations
often causes a project’s leadership to take the path
of least resistance and simply transplant existing
software architecture to the cloud by relying on the
Infrastructure-as-a-Service (IaaS) offering of their
cloud provider.This option results in migrating the
application by merely creating its mirror image in the
cloud, with each on-premise server migrated to its
virtualised cloud counterpart.This approach requires
few changes in the software itself for the migration.
In the long run, this deprives organisations of
the tremendous value and potential of true cloud
technologies such as Docker, Kubernetes,Amazon
Web Services (AWS), and Lambda, Fargate, Step
and Azure functions.The advantages of true cloud
technologies include lower development and
operating costs – due to the use-based billing
model of the serverless cloud – and superior
scalability and flexibility.
By implementing serverless cloud technologies,
CompatibL was able to reduce the infrastructure cost
of CompatibL Risk Cloud deployment in theAWS
cloud by an average of 62%, and in theAzure cloud
by an average of 72% compared with deploying the
same application in an on-premise data centre.This
cost advantage was made possible by leveraging true
serverless cloud technologies rather than running the
existing application on virtualised servers.
Adapting to the central processing unit (CPU)-
heavy requirements of enterprise risk
Most cloud architecture solutions are designed for
a set of standard performance requirements that
are very different from the unique performance
requirements of enterprise risk management.
A typical cloud application has moderate CPU or
random access memory (RAM) requirements and
can run with each virtual CPU (vCPU) supporting a
large number of concurrent users without running
into performance limitations. In enterprise risk
management, most calculations are CPU- and RAM-
intensive.The cloud architect must consider the
limitations to popular cloud technologies that may
be triggered by running such loads.
For example, each AWS Lambda calculation is
limited to15 minutes – there are limits to how many
vCPUs an AWS Fargate run can use, and the list of
limitations unfamiliar to software engineers with
on-premises-only experience goes on and on.These
limitations must be addressed when moving from an
on-premise enterprise risk application that performs
a single, long calculation on a manycore server to
a cloud architecture where each element of the
calculation is limited in the time it takes to run and
the number of vCPUs it can use.
User collaboration in the cloud
With typical cloud applications, there is no need to
share query or calculation results between users –
the application performs each query or calculation
anew because the overhead costs of storing the
results exceed that of repeating the call to the
function that produces them.
In enterprise risk, using the application is a
collaborative process, and multiple users can work
together to produce or analyse the same complex,
CPU-intensive reports. In a well-designed enterprise
risk cloud application, users can view each other’s
progress and share their settings and results easily.
An effective and easy-to-use multi-user mode helps
reduce the cost of running enterprise risk in the
cloud through more effective collaboration and
data sharing.
Summary
Migrating to the cloud entails much more than
moving existing on-premise applications to
virtualised servers hosted by cloud IaaS providers.
Only by embracing true serverless cloud technologies
can firms leverage the full benefits of the cloud in
reducing the development and operational costs of
enterprise risk. ■
AWS and Azure
In CompatibL Risk multi-user mode, users can view current progress and other
users’ real-time changes

4. 3
Sponsored Q&A
Cloud adoption Special report 2019
Seamless integration
Drivers of and barriers
to cloud adoption
Siarhei Niaborski, executive vice-president of risk at CompatibL, discusses the rate of cloud adoption in the capital markets industry
and its possible drivers and barriers, how firms can derive maximum value from cloud usage and the criteria on which firms should
determine their choice of cloud model

5. 4
Sponsored Q&A
risk.net
To what extent are capital markets firms embracing cloud?
Siarhei Niaborski: In the past, the capital markets industry lagged behind
others when it came to cloud adoption.While the initially slow adoption rate
of cloud technologies in capital markets was often attributed to the need
to comply with regulations, other heavily regulated industries such as retail
banking and insurance have historically had a greater cloud adoption rate than
capital markets.
This trend is beginning to change, and capital markets firms are rapidly
moving towards cloud adoption.They now see technology transformation as
part of their strategic, long-term objectives.
As a software and services vendor, CompatibL is ready to collaborate with
its clients in their cloud transitions. CompatibL has developed multiple cloud
deployment options for its software – CompatibL Platform and CompatibL
Risk – including on-premise, hybrid cloud and public cloud. CompatibL has also
invested in making its software work with most mainstream cloud providers.
What is driving cloud use?
Siarhei Niaborski: The primary driver of cloud adoption in the capital markets
industry is the increased demand for low-cost computational and storage
resources that can be scaled up and down on demand according to the needs
of the enterprise.The ability to rapidly provision new infrastructure drives firms’
ability to quickly respond to changes in the market, deploy new technologies and
incorporate big data and new analytics into their business processes.
By cutting the time it takes to deploy and scale their IT infrastructure – and
avoiding the need to pay for excess capacity – cloud adoption helps firms better
meet their business needs and gain a competitive edge in today’s challenging
market environment.
How can firms maximise the benefits cloud offers?
Siarhei Niaborski: Firms may derive limited benefits from moving their existing
in-house or vendor applications that were initially designed for the data centre
to virtual servers hosted in the cloud without software re‑engineering and
without utilising true serverless cloud technologies. In this Infrastructure-as-a-
Service cloud deployment model, the firm retains full control over the servers and
makes either limited or no changes to their software. However, this approach
does not deliver the full power of the cloud.
To unlock the full potential of the cloud, the software itself must be
re‑engineered around such cloud technologies as serverless computing,
non‑structured query language (NoSQL) databases and cloud storage. Cloud
benefits can only be maximised by fully embracing the cloud, incorporating true
serverless cloud technology and tools into a firm’s application architecture, and
demanding the same of the firm’s vendors.
What are the barriers to wider cloud adoption?
Siarhei Niaborski: In the past, the main barrier to cloud adoption was the
lack of certainty and industry experience in complying with data protection
regulations and internal policies when firms’ data – and, more importantly,
their clients’ data – is not located in their own data centre. Following
advances in cloud security and the steps taken by regulators to clarify how
capital markets firms can implement regulatory data protection requirements
in the cloud, privacy and security are no longer the main obstacles to
cloud adoption.
The remaining challenge is the complexity of data and processes in large
capital markets enterprises. Unlike a typical cloud-based retail application,
the enterprise capital markets function relies on a complex network of data
providers, trading and risk systems, reporting solutions, and other existing
technology that must be migrated to the cloud.
CompatibL choses to invest not only in the latest cloud technologies but also
in training its integration and IT specialists to support clients’ transitions from
on-premises to the cloud.
What criteria should determine firms’ choice of cloud model?
Siarhei Niaborski: The National Institute of Standards and Technology, a
standards-setting body, defines three cloud service models (infrastructure,
platform and software) and four deployment models (private, hybrid, public
and community).
The infrastructure service mode – or Software-as-a-Service (SaaS) – is
suitable for firms looking to move their on-premises data centre to the cloud
without re-engineering their software around cloud services.While this
service model brings some limited benefits, only organisations that take the
next step of using the cloud via the platform service model – or Platform-
as-a-Service (PaaS) – maximise the value of cloud migration. For vendor
software, both PaaS and SaaS models offer full access to the latest cloud
technologies, and the choice between them depends on a firm’s preferences
as to who will maintain primary control over the cloud resources used to host
the firm’s data and run its processes – the firm itself for PaaS, or the vendor
for SaaS.
Of the four cloud deployment models, private, hybrid and public are
widely used in capital markets, while the fourth – a community deployment
model where a consortium of firms runs a shared cloud infrastructure – is
relatively rare.
The public cloud – namely, using the infrastructure of an established cloud
provider such as Amazon Web Services or Azure – is usually a more cost-effective
and flexible choice than the private or hybrid cloud. In addition, the public cloud
is frequently the best choice for early access to new cloud technologies. Software
vendors should be able to implement the firm’s choice of cloud deployment
model without restriction.
Where is the greatest potential for cloud computing in the future?
Siarhei Niaborski: The greatest potential for cloud computing for capital
markets is in enabling seamless integration of new technologies (such as
serverless computing and NoSQL) and paradigms (such as big data and
machine learning) into front-office and risk management applications.
The infrastructure and computing demands of these new, game-changing
technological advances are increasingly difficult to meet within the confines of
a traditional data centre.
Organisations that move their business processes to the cloud will gain a
decisive competitive advantage by being able to deploy the new technologies
and analytics faster and at lower cost than competitors that continue to use
on-premises data centres. n
Siarhei Niaborski
ExecutiveVice-President, Risk
www.compatibl.com